Steel jobs on the line amid cuts in capacity

Zhang Fei sums up one of the headaches for Premier Li Keqiang in his efforts to refocus the mainland's economy.

The contractor, who earns 160 yuan (HK$202) for four hours work at a steel mill, is leaning on his red motorcycle in grimy army fatigues and battered running shoes on Galaxy Street. That is a 15-kilometre strip lined with forges, welders, tyre-repair, and car-painting shops, as well as restaurants, a school and a hospital.

After a decade of failed efforts to cut outdated commodity capacity on the mainland, investment bank Goldman Sachs says Li is getting serious, driven by the need to reduce severe pollution.

Zhang and thousands like him on Galaxy Street live off servicing mills in Tangshan, the largest steel city in China that alone has almost five times as many blast furnaces as North America.

"If you shut these plants, we'll all lose our jobs," said Zhang. "If there's no steel industry, we would have a hard time finding other work."

Li's push is mirrored in heavy industries across China, the world's top steel producer and exporter, with the government in July ordering more than 1,400 companies in 19 industries to reduce capacity, targeting steel, ferro-alloys, aluminium, and copper smelting.